US ban dims Safaricom loans for Ethiopia entry

US ban dims Safaricom loans for Ethiopia entry

Safaricom headquarters on Nairobi’s Waiyaki Way. PHOTO | DIANA NGILA Safaricom’s plans to expand to Ethiopia have been complicated by a US State financier threatening to recall its loans following escalation of armed conflict in the horn of Africa nation.

The US International Development Finance Corporation (DFC) says that the acts of violence against civilians in Ethiopia’s Tigray region could affect the release of $500 million loan (Sh53.97 billion) to a consortium led by Safaricom.

The financing had earlier been thrown into doubt over US economic sanctions against Ethiopia related to the conflict in the northern Tigray region, which has killed thousands of people and displaced many more.

But Safaricom last month disclosed that the US State development financier was granted approval to make select investments in Ethiopia, including funding the group made up of, among others, the UK’s Vodafone and South Africa’s Vodacom Group.

The deepening conflict in Ethiopia could force the DFC to pause the investment and push the telecoms companies to source the cash elsewhere and at greater cost.

“The board approval signified initial DFC willingness to consider a loan to the consortium in the event it wins a licence but does not obligate DFC to move forward with the transaction,” the US State development agency told the Business Daily in an e-mail response.

“DFC is working closely with its partner agencies in the US government to monitor the situation in Tigray and will carefully consider its impact on any potential financing of the Vodafone consortium.”

The war pits Tigrayan forces against the Ethiopian military and its allies from Amhara and the neighbouring nation of Eritrea.

Donors suspended some budget support to the government of Prime Minister Abiy Ahmed as reports of mass killings of civilians and gang rapes mounted, raising concerns over war crimes.

The Joe Biden administration has issued economic sanctions against Ethiopia to try to pressure it to end the violence in Tigray.

“As DFC considers next steps, a critical part of its assessment is evaluating the current environment in Ethiopia, which the Secretary of State and DFC board chair has said is marked by credible reports of armed forces…committing acts of violence against civilians, including gender-based violence and other human rights abuses and atrocities,” the State financier said.The Safaricom consortium, which also includes British development finance agency CDC Group and Japan’s Sumitomo Corporation, had agreed to take the Sh53.9 billion from DFC to help with acquisition and development costs.It won the licence […]

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